A March deadline, and a trustee who will never file it

Figures relate to tax year 2025-26 (UK) · 2025 (US)

There is an American return due on 15 March that has nothing to do with your tax return. It reports a trust.

The form is addressed to the trustee. A British trustee has no American registration and no reason to file it, so the duty falls back on the US owner of the foreign trust.

So the penalty, when it comes, lands on the person who assumed somebody else was dealing with it.

Key takeaways

• Form 3520-A is the annual return of a foreign trust with a US owner.
• The trustee is meant to file it, and almost never does.
• The US owner of the foreign trust must then file a substitute themselves.
• It is due on 15 March, not with your tax return.
• An extension is requested separately from your own.
• The penalty starts at five per cent of trust assets.
• Two statements must reach the owner and any beneficiaries.
• It is separate from Form 3520, which you also file.

What is Form 3520-A?

The annual information return of a foreign trust that has a US owner. According to IRS guidance on trust reporting, it sets out the trust's income, its assets and its distributions for the year. It exists so the IRS can see inside a structure sitting entirely outside its reach. It reports information; it calculates no tax.

Nothing is paid with it.

The tax, if any, appears on your own return.

When is it due?

On 15 March following the trust's year end, which is not when your own return is due. That mismatch is the single commonest reason the form is late. An American abroad who files their return in June has already missed this deadline by three months.

Our guide to US tax deadlines for expats covers the other dates.

March, not April, and certainly not June.

Can you extend it?

Yes, but separately from your personal extension. The trust needs its own request, filed by the March deadline, which buys six months. Extending your own return does nothing for the trust, and people routinely assume one covers the other.

Two filings, two extensions.

File the trust extension in February.

Why will a UK trustee not file it?

Because nothing obliges them in their own law and nothing enforces it against them. A British solicitor or trust company has no American registration, no number and no exposure. They will often decline politely, and they are not being unhelpful; they simply cannot be compelled.

Ask early rather than assuming.

The answer is nearly always no.

What is a substitute return?

The version the American owner files when the trustee does not. You complete the form from the trust's accounts and attach it to your own filing package, marked as a substitute. Doing this protects you from the penalty even though the trustee did nothing.

It is the normal route, not the exception.

Most Americans with a foreign trust file this way.

What are the owner and beneficiary statements?

Two short schedules that have to reach the people concerned. The owner statement goes to the American who owns the trust for tax purposes, and a beneficiary statement goes to anyone taking a distribution. Without them, those people cannot complete their own forms correctly.

They are part of the filing, not optional extras.

Send them by the same deadline.

What is the penalty?

Five per cent of the gross value of the trust assets treated as owned by you, for each year the return is missing. That is a percentage of capital rather than of income, so a quiet trust holding property can generate a vast penalty while producing almost no tax. It is the proportionality that shocks people.

Our guide to reasonable cause penalty relief covers the defence.

Capital, not income, drives the figure.

Can the penalty be removed?

Often, with a proper reasonable cause statement. Relying on a professional who did not know, or on a trustee who refused, can support the argument where you acted promptly on discovering it. What does not work is silence followed by a late filing with no explanation attached.

Our guide to the delinquent information returns procedure covers the route.

In our practice first time cases are usually abated.

Can you get the trustee to help?

They can supply the information even if they sign nothing. Trust accounts, a schedule of assets and a record of distributions are all you really need. Asking for data rather than for a filing usually gets a much better response.

Ask for accounts, not for compliance.

That framing works far better.

What records do you need?

The trust deed, annual accounts, a list of assets with values, and details of every distribution. Add the exchange rates used. Those five things are enough to complete the return and to defend it later.

Get the deed read by somebody who knows both systems.

The terms decide everything that follows.

What if you only learn about it years later?

You file the missing years with a reasonable cause statement attached rather than quietly posting them. The delinquent procedures exist for exactly this, and they work far better than hoping nobody notices. Acting promptly on discovery is itself part of the argument.

Our guide to quiet disclosure risks covers the alternative.

Promptness is evidence of good faith.

Does a missing form keep the year open?

Yes, and that is an underappreciated consequence. Where you never filed a required international information return, the window for the whole personal return can stay open until you do. So an old year you believed closed may not be closed at all.

Our guide to the statute of limitations covers the window.

One form holds the whole year.

What does it cost to put right?

Less than the penalty, by a very wide margin. Preparing the missing returns and a reasonable cause statement is a matter of professional time, measured in thousands rather than the five per cent of capital at stake for each year. The cost is almost always worth paying promptly.

In our practice the delay costs far more than the work.

So act in the month you find out.

A worked example

Take an illustrative example. An American in Surrey set up a family trust in 2019 holding £900,000 of investments for her children.

She retained a power that makes her the owner for American purposes, so the trust is a grantor trust.

Her solicitor, the trustee, has never heard of the form and does not file it.

Four missed years at five per cent of trust assets exposes her to penalties around £180,000 on a structure that generated very little actual tax.

Two trust forms, two jobs

Who is treated as the owner?

Usually whoever put the money in, under the grantor trust rules. If an American settles a trust and retains certain powers or benefits, those rules treat the trust's income as theirs personally. A great many ordinary British family trusts fall in here, because the settlor kept a benefit nobody thought twice about.

Our guide to a US settlor of a UK trust covers the grantor rules.

Ownership here is a tax concept, not a legal one.

Does the trust pay American tax?

Not itself, where the grantor rules apply. The income flows onto the owner's personal return and gets taxed there, which is why the form carries no payment. A non grantor trust is a different animal and can face tax in its own right.

Our guide to UK trust distributions and US reporting covers beneficiaries.

The structure decides who pays.

Does a foreign trust affect your own return?

It usually does, because grantor trust income lands on your personal return as though you held the assets yourself. So interest, dividends and gains inside the foreign trust appear on your schedules, with foreign tax credits claimed in the ordinary way. The trust return itself carries no payment at all.

Our guide to Form 1116 income baskets covers the credits.

So one structure produces three filings.

Does it apply to a bare trust?

Often not, because a bare trust is usually looked through entirely. Where a beneficiary is absolutely entitled, the law generally treats the assets as theirs directly rather than as held in a trust. That is a common and welcome answer for British arrangements holding money for children.

Our guide to Junior ISAs and US child tax covers children's money.

The legal label matters less than the terms.

What about a will trust?

A British will creates a foreign trust the moment it takes effect. If an American owns it for tax purposes, or takes distributions, the reporting follows. Families often create these without any idea of the American consequence.

Our guide to wills for Americans in the UK covers the drafting.

So raise it before the will is signed.

Does a UK pension count as a trust?

Technically many count as trusts, but the position is generally benign. Treaty protection and specific relief mean an ordinary workplace or personal pension does not drag you into this reporting. Unusual arrangements and certain offshore schemes are a different matter entirely.

Our guide to UK pensions and US tax covers the treaty position.

Ordinary pensions are not the problem.

What about an employee benefit trust?

These can fall in, and the analysis is rarely simple. Share schemes and employee trusts sometimes turn a participant into an owner or beneficiary for American purposes with nobody intending it. Where your employer operates one, it is worth checking rather than assuming.

Our guide to employee ownership trusts covers one structure.

Ask your employer what the trust actually is.

What if the foreign trust holds UK property?

Then the reporting gets heavier rather than lighter. The property value feeds the penalty base, rental income flows to the owner, and a later sale brings its own calculations on both sides. Trusts holding one family house are among the most common and most awkward cases we see.

Our guide to UK rental income on a US return covers the letting.

Because the asset value drives the exposure.

Does a foreign trust have to report accounts separately?

Often yes, and people forget this layer entirely. Where you hold signature authority over trust bank accounts, or a sufficient interest in the trust, the account reporting rules can reach you personally. That sits on top of the trust return rather than replacing any part of it.

Our guide to FBAR signature authority covers the test.

So check the accounts as well as the trust.

Who else gets dragged into a foreign trust?

More people than the settlor, which is what makes these structures spread. An American child who takes a distribution picks up their own filing, and an American spouse added as a beneficiary does the same. So a trust set up for perfectly ordinary British reasons can hand reporting duties to three generations at once.

So count the Americans before, not after.

Because each one brings their own forms.

Does HMRC want the same information?

Britain has its own register, and it asks different questions. The trust registration service records who is involved rather than reporting income annually to a tax authority abroad. So you end up with two unrelated obligations on one structure.

Our guide to the trust registration service covers the British side.

Neither filing satisfies the other.

Does moving the trust offshore help?

Not for American purposes, and it usually makes matters worse. The reporting follows the American connection rather than the jurisdiction, so moving trustees from London to Jersey changes nothing the IRS cares about. It can also disturb the British position and attract charges that were not there before.

So the move solves a problem you do not have.

But it can create several you did not.

Can a foreign trust ever be simple?

Yes, where it is small, transparent and well documented. A bare arrangement for a child, or a pension scheme covered by the treaty, generally causes no difficulty whatsoever. The problems cluster around discretionary family trusts where the settlor kept powers and nobody asked an American adviser first.

So the structure matters more than the size.

Because the terms decide the treatment.

Should the trust be wound up?

Sometimes, and it is a fair question to ask. Where the structure achieves little in Britain and creates serious American exposure, unwinding it can make sense. That decision needs the British tax consequences priced too, because collapsing a trust is rarely free.

Our trusts and estates service covers the analysis.

Do not collapse one without modelling both sides.

How to file Form 3520-A

1. Establish whether an American owns the foreign trust for tax purposes.
2. Ask the trustee in writing whether they will file.
3. Obtain the trust accounts and a schedule of assets.
4. Diarise 15 March, separately from your own return.
5. File a separate extension for the trust if you need one.
6. Complete the substitute return where the trustee declines.
7. Send the owner and beneficiary statements to the right people.
8. Catch up missed years through the delinquent procedures.

Mistakes and penalties we see with a foreign trust

The first is assuming the trustee will file, when a British trustee almost never does.

The second is using the April or June deadline rather than 15 March.

The third is extending your own return and believing the trust is covered.

The fourth is filing late with no reasonable cause statement, which forfeits the best defence available.

How US UK Tax Accountants helps

We read the deed first, because whether anybody is treated as the owner decides everything else about the reporting.

Then we prepare the substitute return and the statements on the March timetable. Our guide to the non-citizen marital deduction covers a related estate question.

If you settled or benefit from a British trust, get in touch before March rather than after.

Last reviewed 23 October 2026. This article is general information and not personal tax advice, and trust reporting is highly fact specific.